As US embraces real-time payments, corporates should rethink cash strategy

How is the faster payments environment developing in the US and how can the four new market initiatives differentiate themselves in terms of the services they provide to corporates? This is the theme of a guide published by the Association for Financial Professionals (AFP) titled Faster and Better: Faster Payments Initiatives Take Off in 2017.

There are several initiatives that aim to speed up and improve the real-time payment options for US corporates, including those launched by NACHA, The Clearing House (TCH), SWIFT and the Federal Reserve. The guide discusses each of these offerings in detail, including some of the user cases for same-day or real-time payments, which include: same-day payrolls, B2B payments, expedited bill payments and account-to-account transfers.

How the three main B2B initiatives (the Fed initiative is the Faster Payments Task Force, which aims to encourage progress in the industry) will interact in future remains to be seen but the guide's authors say the system likely to have most impact on the US payments landscape is TCH's real-time payments (RTP) system, which is built by VocaLink, the company behind the UK and Singapore's faster payments infrastructure. TCH's RTP system, due to be launched in 2017, will settle transfers in seconds, around the clock.

Such a substantial change in the payment options available to corporates will mean a rethink of their payment processes as well as their liquidity and cash management processes. The guide's authors write: “A major challenge for banks and corporates will simply be adjusting current systems built for batch processing to the faster timeframes.”

CTMfile readers can access a complementary copy of the AFP guide to faster payments here.